ACIT, New Delhi V. M/s. Yash Machines Pvt. Ltd., New Delhi

ITA 991/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3637 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2006-2007
• Appeal Filed On: 18-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIKANT GUPTA
• Keywords: Search and seizure; Share purchase agreement; Documents seized
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI O. P. KANT, ACCOUNTANT MEMBER I.T.AS. NO.990 & 991/DEL/2015 ASSESSMENT YEARS: 2005-06 & 2006-07 ACIT, CENTRAL CIRCLE-30, NEW DELHI V. M/S. YASH MACHINES PVT. LTD., LOTUS TOWER BASEMENT, COMMUNITY CENTRE, NEW FRIENDS COLONY, NEW DELHI. TAN/PAN: AAACY 1482D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAVI KANT GUPTA, SR.D.R. RESPONDENT BY: NONE DATE OF HEARING: 31 01 2018 DATE OF PRONOUNCEMENT: 31 01 2018 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEALS HAVE BEEN FILED BY THE REVENU E AGAINST THE IMPUGNED ORDERS DATED 11/11/2014, PASSE D BY THE LD. CIT (APPEALS)-XXXIII, NEW DELHI FOR THE ASSESSMENT Y EARS 2005-06 AND 2006-07. THE COMMON GROUNDS RAISED BY THE REVEN UE IN BOTH THE APPEALS READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) ERRED IN QUASHING THE ASSESSMENT ORDER. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN AS MUCH AS LAYING DOWN COND ITIONS OF FINDING OF INCRIMINATING DOCUMENTS FOR INVOKING PRO VISION OF SECTION AL 53(A) WHEN THE PLAIN AND CLEAR WORDS OF THE SECTION DO NOT ENVISAGE THE SAME. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) FAILED TO APPRECIATE THAT THERE IS NO RESTRICTION O N THE POWERS OF I.T.A. NO.990 & 991/DEL/2015 2 POWER OF ASSESSING OFFICER U/S 153 A READ WITH 153C OF THE INCOME TAX ACT. 1961 TO CONFINE HIMSELF TO THE INCR IMINATING MATERIAL FOUND DURING THE SEARCH. 4. THE ORDER OF THE CIT (A) IS ERRONEOUS AND IS NOT TE NABLE ON FACTS AND IN LAW. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F THE HEARING OF THE APPEAL. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE. ACCORDINGLY, BOTH THE APPEALS ARE BEING DEC IDED ON MERITS AFTER HEARING THE LEARNED SENIOR DEPARTMENT REPRESE NTATIVE. 3. SINCE HERE IN THIS CASE, THE MATTER HAS BEEN DEC IDED BY THE LD. CIT (A) ON JURISDICTIONAL ISSUE, I.E., THE LEAR NED ASSESSING OFFICER HAS NOT ASSUMED THE JURISDICTION U/S.153C IN ACCORD ANCE WITH LAW, THEREFORE, IT WOULD BE RELEVANT TO NOTE DOWN THE FACT S AS CULLED OUT FROM THE IMPUGNED ORDERS ON THIS ISSUE:- A SEARCH AND SEIZURE OPERATION U/S 132 OF THE INCO ME TAX ACT, 1961 WAS CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTMENT ON 22.03.2011 IN THE AMTEK GROUP OF CASE S. THE PREMISES OF M/S AMTEK AUTO LTD. 9, ALLIED HOUSE LSC , MADANGIR, NEW DELHI ALSO COVERED U/S 132(1) OF THE INCOME TAX ACT, 1961 WHICH IS A GROUP COMPANY OF AMTEK GROUP. THE DOCUME NTS BELONGING TO THE ASSESSEE, M/S. YASH MACHINES PVT. LTD. LOTUS TOWER BASEMENT, COMMUNITY CENTRE, NEW FRIENDS COLON Y, NEW DELHI - 110065. WERE ALSO FOUND AND SEIZED FROM THE PREMISES OF M/S AMTEK AUTO LTD. 9, ALLIED HOUSE LSC, MADANGIR, NEW DELHI IN WHOSE NAME SEARCH WARRANT OF AUTHORIZATION WAS I SSUED. THE CASE WAS CENTRALIZED WITH CENTRAL CIRCLE-14, NEW DE LHI VIDE ORDER F.NO CTT- VI/CENTRALISATION/2012-13/1280 DATE D 13.09.2012. ACCORDINGLY, NOTICE U/S 153C OF THE INC OME TAX ACT I.T.A. NO.990 & 991/DEL/2015 3 WAS ISSUED TO THE ASSESSEE ON 25.09.2012. THE SATIS FACTION NOTE IN THIS REGARD WAS SUPPLIED TO THE ASSESSEE ON 22.1 0.2012 ON HIS REQUISITION. IN RESPONSE TO THE SAID NOTICE, RE TURN DECLARING LOSS OF RS.7,972/- WAS FILED ON 11.12.2012. 4. FROM THE ABOVE NARRATION OF FACTS AS CULLED OUT FROM THE ASSESSMENT ORDER, WE FIND THAT THE SEARCH AND SEIZUR E OPERATION ACTION U/S.132 WAS CARRIED OUT ON 22.03.2011 IN THE AMTEK GROUP OF CASES. DURING THE COURSE OF SEARCH CERTAIN DOCUMENT S BELONGING TO THE ASSESSEE WAS ALSO FOUND AND SEIZED. ACCORDINGLY, IN THE CASE OF THE ASSESSEE JURISDICTION FOR MAKING THE ASSESSMENT WAS TO BE ACQUIRED U/S.153C BY THE ASSESSING OFFICER. IN THE APPELLATE ORDER, THERE IS REPRODUCTION OF SATISFACTION NOTE RECORDED U/S.153C, WHICH HAS BEEN FOUND TO BE RECORDED IN THE CASE OF THE AS SESSEES FILE/CASE, I.E. BY THE ASSESSING OFFICER HAVING JURISDICTION U PON THE ASSESSEE. THE RELEVANT SATISFACTION NOTE FOR THE SAKE OF READ Y REFERENCE IS REPRODUCED HEREIN BELOW:- OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-14, ROOM NO. 320, 3 RD FLOOR, E-2ARA CENTRE, JHANDEWALAN EXTN, NEW DELHI NAME & ADDRESS OF THE ASSESSEE M/S. YASH MACHINES LTD. LOTUS TOWER BASEMENT, COMMUNITY CENTRE, NEW FRIENDS COLONY, DELHI - 110065. PAN AAACY14 82D PERIOD ASST. YEARS 2005-06 TO 2010-11 DATE 18.09.2012 SATISFACTION NOTE U/S 153C OF THE INCOME TAX ACT. 1 961 THE CASE OF M/S. YASH MACHINES LTD. WAS CENTRALIZED U/S 127 OF THE INCOME TAX ACT, 1961 WITH THE ASSESSING OFFICER , CENTRAL I.T.A. NO.990 & 991/DEL/2015 4 CIRCLE-14, NEW DELHI. VIDE ORDER F.NO CTT- VI/CENTRALIZATION/2012-13/1280 DATED 13.09.2012 PAS SED BY CIT-V1, NEW DELHI. SEARCH U/S 132 OF THE IT ACT, 1961 WAS CARRIED OUT AT THE PREMISES OF M/S AMTEK AUTO LTD. 9 ALLIED HOUSE LSC MADANGIR, NEW DELHI ON 22.03.2011. DURING THE COURSE OF SEARC H PROCEEDING IN M/S. AMTEK GROUP OF CASES, CERTAIN DO CUMENTS BELONGING TO M/S YASH MACHINES LTD. WERE FOUND AND SEIZED FROM THE ABOVE MENTIONED PREMISES IN WHOSE NAME SEA RCH WARRANT OF AUTHORIZATION HAS BEEN ISSUED. THE DOCUMENTS SEIZED FROM THE PREMISES OF AMTEK GRO UP AND BELONGING TO M/S YASH MACHINES PVT. LTD. ARE LISTED AS UNDER:- S.NO PARTY NO. PREMISES ANNEXUR E PAGE NO. DESCRIPTION 1 . 02 - 3 M/S AMTEK AUTO LTD. 9 ALLIED HOUSE LSC MADANGIR, NEW DELHI AA - 1 1 - 51 ORIGINAL SHARE CERTIFICATES WITHOUT ADDRESS OF THE SHARE HOLDERS. 2. DO ---- DO ------ AA - 2 1 - 86 BLANK SIGNED SHARE TRANSFER SHARE CAPITAL & SHARE PREMIUM OF RS. 1.71 CRORES HAS BEEN RAISED BY THE COMPANY FROM 44 NON - EXISTENT A. FROM THE DETAIL GIVEN IN THE ABOVE DOCUMENTS, I AM SATISFIED THAT THE PAGES MENTIONED IN THE ABOVE TABLE AND SEIZED FROM THE PREMISES M/S AMTEK AUTO LTD. 9 ALLIED HOUSE LSC MADANGIR, NEW DELHI BELONGS TO M/S YASH MACHINES PVT. LTD. TH EREFORE, IT IS A FIT CASE FOR ASSESSMENT U/S 153C OF THE INCOME TAX ACT, 1961. ACCORDINGLY, NOTICES U/S 153C INCOME TAX ACT, 1961 ARE I.T.A. NO.990 & 991/DEL/2015 5 HEREBY ISSUED TO M/S YASH MACHINES PVT. LTD. FOR TH E A.Y. 2005- 06 TO 2010-11. 5. THE ASSESSEES CASE BEFORE THE LD. CIT (A) HAD B EEN THAT THE SATISFACTION HAS NOT BEEN RECORDED IN THE CASE OF THE PERSON WHO WAS SEARCHED U/S.132(1), THAT IS, IN WHOSE CASE ASSESSME NT WAS TO BE FRAMED U/S.153A. IT WAS SUBMITTED THAT, SINCE JURISD ICTION HAS NOT BEEN ACQUIRED IN ACCORDANCE WITH LAW, THAT IS, PRESC RIBED U/S.153C, THEREFORE, THE ENTIRE PROCEEDINGS IS BAD IN LAW. IN SUPPORT, RELIANCE WAS PLACED UPON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI VS. ACIT & ANOTHER (2007) 289 ITR 341 (SC); HON'BLE GUJARAT HIGH COURT JUDGMENT IN THE CASE OF CIT VS. MEGHNA ORGANICS LTD. IN TAX APPEAL NO. 2077 OF 2009 AND OTHER DECISIONS OF ITAT TRIBUNAL BENCH. APART FROM THAT, RELIANCE HAS ALSO BEEN PLACED UPON THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF SSP AVIATION LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX, (2012) 346 ITR 147 (DEL.) , WHEREIN THE HON'BLE JURISDICTIONAL HIGH COURT OBSERVED THAT NOTE HAS TO BE RECORDED IN THE CASE OF THE SEARCHED PERSON AND NOT THE OTHER PERSON WHO HAS NOT BEEN SEARCHED AND IN THE ABSENCE OF ANY SATISFACTION NOT E IN THE CASE OF SEARCHED PERSON, ASSESSING OFFICER CANNOT ASSUME JU RISDICTION U/S.153C. 6. LD. CIT (A) AFTER TAKING NOTE OF THE FACTS AND M ATERIAL PLACED ON RECORD AS WELL AS THE PRINCIPLE LAID DOWN BY VARIO US COURTS, HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AFTER O BSERVING AND HOLDING AS UNDER:- A PERUSAL OF THE ABOVE FINDINGS, CLEARLY REVEALS T HAT HONBLE ITAT HAS SET THE GUIDELINES FOR ASSUMING THE JURISD ICTION U/S 153C I.E. THE ASSESSING OFFICER OF THE ASSESSEE SEA RCHED U/S 132 WILL WRITE SATISFACTION NOTE THAT CERTAIN DOCUMENTS BELONGED TO I.T.A. NO.990 & 991/DEL/2015 6 OTHER PERSON AND SUCH DOCUMENT/ASSETS/BOOKS OF ACCO UNTS WILL BE HANDED OVER TO THE ASSESSING OFFICER OF OTHER P ERSON. THEN ON THE BASIS OF SATISFACTION SUCH DOCUMENTS/ASSETS/BOO KS OF ACCOUNTS, THE ASSESSING OFFICER OF OTHER PERSON WIL L ASSUME JURISDICTION U/S 153C TO ASSESS SUCH OTHER PERSON. HONBLE ITAT, NEW DELHI IN THE CASE CITED SUPRA FUR THER HELD THAT EVEN IF THE ASSESSING OFFICER OF THE ASSESSEE SEARC HED AND SUCH OTHER PERSON IS SAME, EVEN THEN THE ASSESSING OFFIC ER WILL WRITE SATISFACTION IN THE FILE OF THE ASSESSEE SEARCHED U /S 132 THAT CERTAIN DOCUMENTS/ BOOKS OF ACCOUNTS/ ASSETS SEIZED IN ASSESSEES HAND BELONGS TO PERSON OTHER THAN SEARCH ED. THEN THE COPY OF SUCH SATISFACTION SHOULD BE PLACED IN T HE FILE OF SUCH OTHER PERSON AND THE RELEVANT DOCUMENTS SHOULD BE K EPT IN THE FILE OF SUCH OTHER PERSON, THEN PROCEEDINGS U/S 153 C SHOULD BE INITIATED IN THE CASE OF SUCH OTHER PERSON. THE FIN DINGS OF THE HONBLE ITAT IS REPRODUCED AS UNDER:- WE ARE UNABLE TO AGREE WITH THE VIEW OF THE LEARNE D AR. IF THE ASSESSING OFFICER IS ASSESSING THE PERSON SEARCHED AS WELL AS OTHER PERSON WHOSE ASSETS, BOOKS OF ACCOUNTS OR DOC UMENTS WERE FOUND AT THE TIME OF SEARCH, THEN ALSO, FIRST WHILE MAKING THE ASSESSEMENT IN THE CASE OF THE PERSON SEARCHED, HE HAS TO RECORD THE SATISFACTION THAT THE MONEY, BULLION, JE WELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS BELONG TO THE PERSON OTHER THAN THE PERSO N SEARCHED. THEN, THE COPY OF THIS SATISFACTION NOTE IS TO BE PLACED IN THE FILE OF SUCH OTHER PERSON AND THE REL EVANT DOCUMENT SHOULD ALSO BE TRANSFERRED FROM THE FILE O F PERSON SEARCHED TO THE FILE OF SUCH OTHER PERSON. THEREAFT ER, IN THE CAPACITY OF THE ASSESSING OFFICER OF SUCH OTHER PER SON, HE HAS TO ISSUE THE NOTICE UNDER SECTION 153A READ WITH SE CTION 153C. I.T.A. NO.990 & 991/DEL/2015 7 THE ASSESSING OFFICER OF THE PERSON SEARCHED AND SU CH OTHER PERSON MAY BE THE SAME BUT THESE ARE TWO DIFFERENT ASSESSEES AND THEREFORE, THE ASSESSING OFFICER HAS TO CARRY OUT THE DUAL EXERCISE, FIRST AS THE ASSESSING OFFIC ER OF THE PERSON SEARCHED IN WHICH HE HAS TO RECORD THE SATIS FACTION, DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF THE PERSON SEARCHED. AFTER RECORDING SUCH SATISFACTION NOTE IN THE FILE OF THE PERSON SEARCHED, THE SAME IS TO BE PLACED IN TH E FILE OF SUCH OTHER PERSON. THEN, IN HIS CAPACITY AS THE ASS ESSING OFFICER OF SUCH OTHER PERSON, HE SHOULD TAKE COGNIZ ANCE OF SUCH SATISFACTION NOTE AND THEREAFTER ISSUE NOTICE UNDER SECTION 158BC. IN THIS CASE, THIS EXERCISE OF RECOR DING THE SATISFACTION DURING THE ASSESSMENT PROCEEDINGS OF T HE PERSON SEARCHED HAS NOT BEEN CARRIED OUT. ON THE OTHER HAN D, THE ASSESSING OFFICER RECORDED THE SATISFACTION IN THE CASE OF SUCH OTHER PERSON WHICH DOES NOT SATISFY THE CONDITION O F ASSUMING JURISDICTION UNDER SECTION 153C. MOREOVER, NO ORIGI NAL SATISFACTION NOTE IS AVAILABLE ON RECORD. THE PHOTO COPY OF THE SATISFACTION NOTE PRODUCED BEFORE US DOES NOT BEAR NAME OF ANY ASSESSEE, NAME OF THE ASSESSING OFFICER OR ANY SEAL OF THE ASSESSING 11 ITA-1344/DEL/2012 OFFICER. THEREFORE, THE SHOVE SATISFACTION NOTE CANNOT BE SAID TO BE A VALID SATI SFACTION NOTE WITHIN THE MEANING OF SECTION 153C. I HAVE ALREADY CONCLUDED THAT THE SATISFACTION NOTE IS NOT RECORDED IN THE FILE OF THE LESSEE SEARCHED U/S 132 AND DOCU MENTS CLAIMED TO BE OWNED BY THE APPELLANT WAS TRANSFERRED THE FI LE OF THE APPELLANT. THEREFORE, THE JURISDICTION ASSUMED U/S 153C IN THE CASE OF THE APPELLANT IS NOT IN ACCORDANCE WITH THE FIND INGS OF HONBLE ITAT IN THE CASE OF DSL PROPERTIES (P) LTD. CITED S UPRA. THEREFORE, IT IS CONCLUDED THAT THE JURISDICTION U/S 153C IS NOT ASSUMED PROPERLY I.T.A. NO.990 & 991/DEL/2015 8 AND IN ACCORDANCE WITH LAW AS PER THE DECISION OF H ONBLE ITAT CITED SUPRA. ACCORDINGLY, THE ASSESSMENT ORDER PASS ED U/S 153C FOR ALL THE ASSESSMENT YEARS ARE HEREBY QUASHED. AS THE ASSESSMENT ORDER IS QUASHED ON JURISDICTIONA L GROUND, OTHER GROUNDS OF APPEAL ARE NOT ADJUDICATED. 7. AFTER CONSIDERING THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER AND THE CONTENTIONS RAISED BY THE LE ARNED SR. D.R., WE FIND THAT THERE IS NO DISPUTE WITH REGARD TO THE F ACT THAT THE SATISFACTION IN TERMS OF SECTION 153C HAS NOT BEE N RECORDED IN THE CASE OF THE PERSON SEARCHED IN WHOSE CASE ASSESSMENT HAS BEEN FRAMED U/S.153A, ALBEIT THE SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE. THIS IS ALSO APPARENT FROM THE CLEAR CUT FINDING OF THE LD. CIT (A) THAT THE SATISFACTION NOTE HAS BEEN RECORDED IN THE ASSESSEES FILE AND NOT IN THE FILE OF THE PERSON SEARCHED. IN VIEW OF THIS ADMITTED POSITION, THE PRINCIPLE LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF SSP AVIATION LTD. VS. DCIT AND HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MEGHNA ORGANICS (SUPRA) WHICH HAS BEEN FOLLOWED BY THE TRIBUNAL IN VARIOUS CASES AS REPRODUCED BY THE LD. CIT (A), WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) A ND THE SAME IS AFFIRMED. 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31ST JANUARY, 2018. SD/- SD/- [O.P. KANT] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31 ST JANUARY, 2018 PKK: